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Precinct Properties NZ & Precinct Properties Investments Ltd Analysis

Overview

Precinct is the largest owner, manager and developer of premium inner-city real estate in Auckland and Wellington. Precinct is predominantly invested in office buildings and also includes investment in Generator, Commercial Bay retail, third party capital partnerships, and a multi-unit residential development business. For information visit: www.precinct.co.nz

Precinct was originated as AMP NZ Office Trust, which was floated and listed on NZX under the symbol of APT since December 1997. In November 2010 it changed its legal structure from a unit trust into a corporate. The company name was changed to AMP NZ Office Limited (ANO) at the same time. In September 2012 the company's name was changed to Precinct Properties New Zealand Limited, with the ticker code PCT.

On 1 July 2023, Precinct effected a restructuring to create a stapled group structure. A stapled group comprises two listed parent companies whose shares are held by the same shareholders in equal proportions. The shares in each parent company can only be transferred or dealt with together. Shareholders in Precinct Properties Group (“Precinct”) hold an equal number of shares in Precinct Properties New Zealand Limited (“PPNZ”) and Precinct Properties Investments Limited (“PPIL”) and these shares can only be dealt with together. The stapled issuers are described as “Precinct Properties NZ Ltd & Precinct Properties Investments Ltd (NS)” on NZX systems and the ticker code for the stapled shares remains PCT.

Precinct’s investments and income that qualify for the purposes of Portfolio Investment Entity (PIE) status (such as long-term holding of commercial real estate assets) will mainly be undertaken by PPNZ and its subsidiaries, while investments and income that do not qualify for PIE status (such as management income and operational businesses) will mainly be undertaken by PPIL and its subsidiaries.

Performance

The following information was extracted from Precinct Properties New Zealand Limited's half year results, released on 22 February 2024:

Financial summary

  • Funds from operations (FFO) from directly held investment portfolio of $63.5 million, up 4.3% (1H23: $60.9 million), contributing to net operating income before tax of $54.3 million, up 3.4%2 (1H23: $51.3 million).
  • Net property income (NPI) of $68.3 million achieved for the first half, up 2.5% (1H23: $65.4 million).
  • Total comprehensive income after tax of $12.9 million compared to $0.6 million in 1H23.
  • Adjusted funds from operations (AFFO) of 3.26 cps (1H23: 3.42 cps, 2H23: 3.27 cps).
  • FY24 dividend guidance remains at 6.75 cps.

Executing strategic initiatives with active capital management supporting growth

  • Entered into conditional agreement with Eke Panuku to acquire and redevelop the Downtown Car Park site in Auckland.
  • Joint venture formed with Ngāti Whātua Ōrākei, to invest in the regeneration of the Te Tōangaroa precinct in Auckland. Precinct’s investment is in partnership with PAG.
  • Commenced construction of two new build-to-sell apartment developments on behalf of capital partners.
  • Sale of Mason Bros. building located in Auckland for $50.3 million with capital from the sale supporting continued evolution and execution of our strategy.
  • $150 million of subordinated convertible notes issued during the period providing Precinct capital management and strategic benefits.

Disclaimer: This section is provided as general information only. It is not intended as a substitute for legal or professional advice to company directors and officers or investors. NZX Limited disclaims any liability arising from the use of this information.